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Factors including expectations of U.S. interest rate hikes have driven investors to sell silver. Silver futures prices closed slightly higher last Friday, with silver futures prices falling by about .% throughout the week. Closed at .USD/oz. The market generally believes that the outlook for silver futures is still not optimistic. Affected by multiple factors, silver prices still have the momentum to fall further, with the Federal Reserve's monthly interest rate hike being the biggest threat.
According to the Federal Watch Tool, the market is now pricing in a % chance of a rate hike. Higher interest rates will further support the dollar, making commodities expensive for holders of other currencies. In addition, the continued reduction of silver positions is also negative for the trend of gold prices.
There is still hope for the silver price outlook
Asset management companies pointed out that silver futures prices will fall more in the short term, but there will also be a rebound. "We may see another lower week, based on the strength of the dollar and a sudden change in sentiment," he said. However, looking forward, there are still reasons to be bullish. The euro zone will trigger another crisis due to the Italian referendum. The referendum may lead to the overthrow of the euro zone government or bring pressure to Europe. Then comes the French election. The anti-European front cannot underestimate the British Brexit negotiations. The Brexit negotiations will also be very tense. There is also the renegotiation of Greek debt. &
The shock and uncertainty in Europe is good for the dollar, but it is also good for silver prices, as we saw during the 2016 euro crisis. Any rate hikes from the Fed are likely to be dovish while the rest of the world remains accommodative.
Silver futures also fell sharply in early trading, hitting intraday lows of RMB/kg. The expected plunge in silver futures is showing. In addition to the Fed's interest rate hike, Italy's departure from the European Union is also imminent. Once Brexit is reached, it will surely trigger another major earthquake. In this case, silver futures prices are expected to make new breakthroughs. The recent bearish momentum in silver futures will not change, and the pressure from interest rate hikes has caused silver prices to continue to decline.
After experiencing ups and downs in news in the past few weeks, market news this week has been relatively light. Yesterday, Fed Vice Chairman Fisher issued a hint about monetary policy. On the one hand, he pointed out that the current economy has improved significantly, paving the way for an interest rate increase next month. On the other hand, Fisher also emphasized that interest rates will remain at the long-term low, and talked about the risk of a stronger dollar.
At present, although the possibility of the Federal Reserve raising interest rates monthly is extremely high, since the market has already digested this expectation in advance, precious metals will not fall sharply after the final news is announced. After a short-term negative pullback, it is expected that Gold and silver are expected to rebound from oversold conditions. The long-term interest rates he refers to remain low, which has paved the way for gold and silver to rebound in the medium and long term. It is expected that the pace of interest rate hikes by the Federal Reserve will still be relatively slow in the future.
From a technical point of view of today’s silver price, the daily line is once again bearish, and the indicators in the attached picture have a long-term dead cross and high volume. Today's silver price is biased toward the long side in the hour, and the dollar line has formed short-term support for silver price. On the whole, silver has bottomed out as a whole, and it is recommended to go long on the rebound.